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Q1) A market research team has come up with the demand and supply schedules for pizza. These schedules are given in the table below. Use these data to analyze the situation in the market for pizza.
Price
(dollars per pizza)
Quantity demanded
(pizzas per week)
Quantity supplied
5
750
300
6
700
400
7
650
500
8
600
9
550
10
800
11
450
900
12
1,000
a) Draw a figure showing the demand curve for pizza and the supply curve of pizza. What are the equilibrium price and quantity?
b) Suppose the price is $10. Describe the situation in the market and explain how the price of pizza adjusts.
c) Now suppose the price is $6. Describe the situation in the market and explain how the price of pizza adjusts.
Q2) What are substitutes in production and complements in production? Give one example each.
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